Prime Minister Jacinda Ardern says that the party has not handled the current bullying and intimidation complaints against a Labour staffer as well as it could have.
Yesterday Labour Party president Nigel Haworth announced that the party's ruling New Zealand council would implement new rules to ensure that serious allegations would be looked at by an independent expert.
He added that the seven people who had laid formal complaints with the party about a Labour staffer would be invited to have their cases looked at again, with funding for any legal advice.
It was tacit acknowledgement that the party had failed to adequately look after the complainants after it had pledged to change its ways following the infamous Young Labour Summer camp last year.
But Ardern went further this morning, saying that the party had not met expectations.
"It hasn't been dealt with as well it could have," Ardern told Mike Hosking on NewstalkZB.
Ardern says the Labour Party considered looking at the issues itself.
"The Party has concluded that bringing a neutral third party is a better way to go in dealing with this situation."
She said the questions the complainants raised were whether the party had followed its new processes, which were installed after the party's review of the summer camp, rather than whether those processes were adequate.
The party would now work out a new process whereby complaints about sensitive issues would be looked at by an independent expert.
Seven formal complaints were laid with the party and up to 12 people made general complaints about a Labour staffer who works in the parliamentary precinct.
The Labour Party looked into the complaints in March and took no disciplinary action, but the party decided to review its processes after further complaints were laid.
Three of the complainants approached National Party deputy leader Paula Bennett, who said they felt fearful, intimidated, and not taken seriously.
"They've have been told to keep quiet about what's going on, that it should be kept as an internal process, advised not to go to the police. They feel they are losing all options and actually losing hope," Bennett said last week.
Labour's ruling New Zealand council met at the weekend, and Haworth released the council's decision in a statement yesterday evening.
"Ensuring the appeal is done by an independent expert who is at arm's length from the party is important for building trust in the process in the future," Haworth said.
"Reasonable financial support will be provided to any person participating in the appeal process to ensure that they are able to obtain appropriate legal advice as the process proceeds.
"Personal and emotional support, independent of the party, will also be provided to any person participating in the appeal process."
The current allegations followed ones of sexual harassment in February last year following the summer camp.
A 20-year-old man was charged with four counts of indecent assault at the Waihi camp.
Ardern said last week that the current review was a test to see what the party had learned.
"The party's taking a good look as to whether or not we're satisfied with the natural process of justice and whether or not we've supported the complainants as we should have."